If you’re looking at past due balances on credit cards, and creditors are beginning to call and leave messages about the status of your accounts, you might be wondering what your options are. It’s increasingly common for individuals to find themselves in precarious financial situations after hardships or poor money management.
It’s not easy to bounce back, and once the creditors begin calling, you might start paying closer attention to the ads of companies who offer to take all your stress away and settle those debts for you. But what’s the better option? Should you do it yourself or should you leave this task to the professionals?
We’re going to lay out the pros and cons of both, and help you make your own informed decision.
Professional Debt Relief
Professional debt relief companies handle cases like yours all the time. They call companies regularly, and negotiate all day long. There isn’t an emotional component to their conversations. They simply have the goal of reducing your overall payoff amount and getting you the most savings so you can reduce the time it takes to pay off your debts.
Often, because of their affinity for negotiating, they may be able to accomplish lower payoff amounts than you could on your own. They also dedicate their working hours to negotiating on your behalf, and that’s time you may not have to spare.
There are a lot of pros to calling companies who specialize in debt reduction, but they come at a price. While they may do this regularly and remove the stress of having to confront your debt yourself, they charge fees for their services. Those fees may reach amounts as high as 25% of your total debt owed. Other fee structures may charge up to 40% of the total money saved after negotiations. Either way, there’s a potential hefty fee for those services, and that can make a significant dent in your wallet when you’re trying to become debt free.
DIY Debt Relief
If you find that settling your debt is your best option, apart from bankruptcy or a family loan, you might want to consider navigating it yourself. After all, you’d be handling everything on your own and not having to pay any fees that negate the settlements you work hard to negotiate.
Confronting your debt takes courage, and many people fear this as they consider doing it themselves. But when you take charge of your debt negotiations and work hard to clear your financial slate, you have an intrinsic motivation to get- and keep- your finances in order. And that kind of motivation has the potential to change your habits long-term.
It may be worth it to take a hands-on approach with your debt settlement, but begin the process with realistic expectations. Negotiations have the potential to drag on for months, even years.
Debt collectors operate with a goal of getting you to pay the highest possible amount on your debts. They will likely adopt strategies that provoke emotional responses from you, which can make your efforts feel exhausting. You will need to deploy patience and understand that it may be hard, but it can be worthwhile if you press toward your goal.
While there are benefits and drawbacks with both approaches to debt settlement, it’s still a very personal decision. You have to consider factors like time, resources, and stress as you determine the appropriate path you take. Whatever you decide, we commend you for taking the steps to become debt free.